Stocks’ Details

MakeMyTrip Limited

2QFY21 Key Financial Highlights: MakeMyTrip Limited (NASDAQ: MMYT) is a leading travel company that allows customers to research, plan and book a wide range of travel services and products. During the September 2020 quarter, the company reported revenue of $21.1 million, down by 82.2% on pcp, due to the impact of the COVID-19 pandemic and lower travel demand due to travel restrictions and nationwide lockdown. For the quarter, the company reported a loss per share of $0.20, as compared to loss per share of $0.35 reported in 2QFY20. At the end of the quarter, the company had cash and cash equivalents and term deposit of $197.7 million. In order to increase its balance sheet flexibility, the company has secured credit and guarantee facilities of approximately $100 million.

Quarter Results (Source: Company Reports)

What to Expect: To curb the impact of COVID-19 pandemic and substantial loss of travel demand, the company continues to focus cost-cutting initiatives and aims to minimize losses, going forward. Further, the company’s various cost-saving measures including compensation cuts, optimizing its IT infrastructure costs and various other general and administrative expenses, will aid the company to come out stronger post COVID-19 period.

Valuation Methodology: P/BV Multiple Based Relative Valuation (Illustrative)

P/BV Multiple Based Relative Valuation (Source: Refinitiv, Thomson Reuters)

Note: All the forecasted figures are taken from Thomson Reuters, NTM: Next Twelve Months

Stock Recommendation: The stock went up by 86.54% in the last three months and 73.89% in the last six months. MMYT is currently inclined towards its 52 weeks’ high price of $30.13. On the technical analysis front, the stock has an immediate support level of ~$24.5 and a resistance level of ~$26.5. For FY20, the company’s current ratio stood at 1.55x, lower than FY19 figure of 2.15x. We have valued the stock using the price to book value multiple based illustrative relative valuation method and have arrived at a target price of low double-digit upside (in % terms). Considering the current trading levels, steep price movement in the past months, risks related to COVID-19 pandemic, disruptions in the travel industry, decline in 2QFY21 revenues, and key investment risks, we suggest investors to book profit and give a ‘Sell’ rating on the stock at the closing price of $25.65, up by 1.66% on 20 November 2020.

GreenPower Motor Company Inc

Grant of Stock Options: GreenPower Motor Company Inc. (NASDAQ: GP) is engaged in designing, building, and distributing transit buses, school buses, shuttles, cargo van, and a double-decker. Recently, GP informed the market that it has granted an aggregate of 300,000 incentive stock options with 100,000 stock options to each of Brendan Riley, Michael Sieffert and Fraser Atkinson. The stock options are exercisable for a term of 5 years at a price of US$20 per share, subject to TSX Venture Exchange approval.

2QFY21 Key Financial Highlights (For the Period Ended 30 September 2020): During the quarter, the company reached numerous key milestones and reported revenue of $2.8 million and generated a gross profit of $883.7k (31.2% of revenue). In the same time span, the company delivered 20 EV Stars to Green Commuter and received an order for 100 EV Stars and 10 all-electric BEAST school buses and can address a variety of lucrative markets that demonstrate high demand. Loss for operations for the period came in at $1.49 million.

Q2FY21 Results (Source: Company Reports)

Stock Recommendation: As per NASDAQ, the stock of GP is trading close to its 52-weeks’ high level of $23.45 and seems to have reached its market potential. The stock of GP gave a return of 1,024.48% in the past six months and a return of 123.98% in the last one month. On a technical front, the stock of GP has an immediate support level of ~$21.5 and a resistance level of ~$23.2. Considering the current trading levels, steep price movement in the past months, softer market conditions, decline in 2QFY21 revenues, losses in 2QFY21, and key investment risks, we suggest investors to book profit and give a ‘Sell’ rating on the stock at the closing price of $22.04, up by 16.31% on 20 November 2020. 

Trevena, Inc.

OLINVYK Expected to be Available in November 2020: Trevena, Inc. (NASDAQ: TRVN) is a biopharmaceutical company, engaged in developing medicines for treating patients with central nervous system (CNS) ailments. The company also stated that OLINVYK has been classified as a Schedule II controlled substance by the U.S. Drug Enforcement Administration (DEA), which is expected to be available for distribution in November 2020. The company recently announced two publications of the respiratory safety data from the OLINVYK development program, highlighting improved respiratory safety profile for OLINVYK compared to IV morphine.

September 2020 Quarter Update: For the September 2020 quarter, the company reported total license revenues of $3 million. Total operating expenses stood at ~$8.39 million, comprising general and administrative expenses of $4.1 million and research and development expenses of ~$4.3 million. For the quarter, the company incurred a net loss of $5.5 million. At the end of the quarter, the company had cash, cash equivalents and restricted cash of $112.6 million. Net cash used from operating activities for the nine months ended 30 September 2020 came in at $14.3 million.

September Quarter results (Source: Company Reports)

What to Expect: In June 2020, the company collaborated with Imperial College London to initiate a proof-of-concept study for TRV027 in COVID-19 patients. The top-line data from the study is expected in Q1 2021.

Key Risks and Challenges: The company is exposed to the challenges and risks related to the completion of its nonclinical testing and clinical trials of its product candidates, identifying additional product candidates, potentially entering into collaboration and license agreements, and obtaining regulatory approval for product candidates.

Stock Recommendation: Over the past six months, the stock of TRVN has provided a return of 85.82%, and 57.59% in the last one month. On the technical analysis front, the stock has an immediate support level of ~$1.47 and a resistance of ~$3.2. The stock is currently trading close to its 52-weeks’ high level of $3.68 and seems to have reached its market potential. Considering the current trading levels, steep price movement in the past months, challenges and risks related to the completion of its non-clinical testing and clinical trials of its product candidates, and key investment risks, we suggest investors to book profit and give a ‘Sell’ rating on the stock at the closing price of $2.49, up by 1.63% on 20 November 2020.

Comparative Price Chart (Source: Refinitiv, Thomson Reuters)

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